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Italian consumer groups file EU complaint against McDonald's

Tuesday, January 12, 2016 - 16:50

Three Italian consumer organisations have accused U.S. fast food chain McDonald's of operating an anti-competitive system in Europe, with restrictive clauses imposed on franchise operators that may breach the bloc's antitrust rules.

PHOTO: REUTERS

[BRUSSELS] Three Italian consumer organisations have accused U.S. fast food chain McDonald's of operating an anti-competitive system in Europe, with restrictive clauses imposed on franchise operators that may breach the bloc's antitrust rules.

Codacons, Movimento Difesa del Cittadino and Cittadinanzattiva filed a complaint with the European Commission on Monday, urging the EU competition enforcer to step in. "The system construed by McDonald's raises strong concerns under antitrust laws," the group said in its complaint seen by Reuters.

At issue are franchise contracts, which on average last 20 years and so are twice as long as most other franchises, a requirement on licensees to lease premises from McDonald's at above-market rates and conditions hindering them from switching to competitors, the group says.

"McDonald's exercises an excessive and disproportionate control on its franchisees by implementing conditions that exceed without justification what is required for the protection of its system, its know-how and reputation," the group said.

It said the restrictions hurt competition, resulting in consumers paying higher prices.

Franchisees operate about 75 per cent of McDonald's outlets in Europe.

It is far from certain that the Commission will open a second probe into the company. Complaints are usually followed by questionnaires sent to companies, after which the regulator determines whether there is cause for further action.

The European Commission said in December that it had opened an investigation into McDonald's tax deals with Luxembourg, saying these enabled the company to escape paying taxes on its European royalties both in Luxembourg and in the United States.